Quoted In: Is Your Student Loan Safe? (ABC News)

Forget back-to-school shopping: With just a few weeks to go before the start of the fall semester, many college students are doing some last-minute student-loan shopping as more and more cash-strapped lenders drop out of the student loan business.

Student loan companies traditionally raise capital by selling bonds, but as a fallout from the subprime housing meltdown continues to shake the country’s financial sector, investors have become wary about putting their money into student loans.

As a result, "lenders have been having a hard time raising enough capital to continue making loans," said Justin Draeger, a spokesman with the National Association of Student Financial Aid Administrators.

NASFAA’s Draeger said the federal government has taken steps to shore up the student loan market through the Ensuring Continued Access To Student Loans Act, which was signed into law in May. Among other measures, it allows the U.S. Department of Education to buy government-backed loans from student lenders, thereby providing lenders with more capital that they can then use to make new loans.

The bill passed Congress and hit the president’s desk "very fast," Draeger said. "Everyone’s on the same page — no one wants to see a student denied any access to a federal student loan."

Draeger conceded, however, that the credit crunch means that private loans will be harder to obtain.

You can read the complete July 30, 2008 ABC News article on-line.